Fraud Newsletter 48 – OCTOBER 2020
- DPA with Airline Services Ltd: s7 UKBA re company’s use of agents to win £7.3m Lufthansa contracts: ASL to pay £2.9m (£1.2m penalty, £990k disgorgement, £750k costs). ASL no longer trades: 30 Oct 20.
Affidavits made voluntarily in disqualification proceedings disclosable to SFO’s parallel Ponzi investigation on application to the court: OR v Skeene  EWHC 1252 (Ch) [Westlaw].
Legal Advice Privilege includes communications with foreign lawyers – those acting in the capacity or function of a lawyer – including in house lawyers – and the court will not enquire into how or why the foreign lawyer is regulated or what standards apply under local law: PJSC Tatneft v Bogolyubov  EWHC 2437 (Comm).
Fraudulent Evasion of Tax: Evidence and self-incrimination. Undeclared profits of restaurant. D told HMRC his daybooks accurately recorded his takings and his accountant did his tax. D’s failure to provide daybooks at trial properly relevant to his credibility: Ferati  EWCA Crim 1313 [Westlaw].
Fraud summing-up – pervasive and profound failings (serious misdirections of law, failure to summarise evidence, irrelevant homilies): review of judge’s duties: Yousefi  EWCA Crim 791.
Request for Assistance: UK Central Authority’s response – to direct that a search warrant or production order is sought – is lawful: R. (Terra Services) v NCA  EWHC 1640 (Admin).
Early unequivocal indication of plea required for full discount – “likely” guilty plea inadequate: Hodgin  EWCA Crim. 1388.
Setting aside a judgement for fraud (forged signature on profit sharing agreement): application of materiality test in RBS v Highland Financial Partners  EWCA Civ 328: Takhar v Gracefield Developments Ltd  EWHC 2791 [Westlaw]
SENTENCING AND CONFISCATION
Confiscation Order effective when made: no requirement to be formally written: Westbrook  EWCA Crim 1243.
Costs from Central Funds for private prosecutor enforcing a confiscation order: Mirchandani v Lord Chancellor  EWCA Civ 1260.
Beneficial interest determines equitable interest is absence of POCA tainted gift assertion: Bevan  EWCA Crim 1345
BILLS, STATUTES & STATUTORY INSTRUMENTS
Financial Services Bill: introduces tougher penalties for market abuse and revised rules on disclosing information to investors. HM Treasury Summary: 21 Oct 20: and see Amendments to the Benchmarks Regulation to support LIBOR transition: Policy Statement: 21 Oct 20. Progress of the Bill.
The Criminal Procedure and Investigations Act 1996 (Code of Practice) Order 2020 22 Oct 20 brings into force revised Code of Practice as from 31 Dec 20. Summary of purpose
Investigators) (Amendment) (England and Wales) Order 2020 SI 2020 No. 1978 (re Accredited Financial Investigators) in force 26 Oct 20.
Sentencing Act 2020: granted royal assent: 22 Oct 20. Details in MoJ Press release.
CONSULTATIONS, GUIDANCE, CIRCULARS AND REPORTS
CMA & SFO memorandum of understanding (published 29 April 2014) updated 21 Oct 20.
Money laundering Guidance: HMRC: 14 & 16 Oct 20.
Understanding risk and taking action for –
International Standards on Combating ML and the Financing of Terrorism & Proliferation: FATF Recommendations: updated 28 Oct 20. New interpretive note added re inter-agency framework for domestic co-operation, co-ordination & information exchange.
SRA Business Plan 2020-21: includes expanding AML visits to all high-risk firms on a 3 year rolling basis, reporting directly to OPBAS and HM Treasury (§29 et seq.): 1 Oct 20.
Proposed ISA (UK) 240 The Auditor’s responsibilities re Fraud in an Audit of Financial Statements: FRC 20 Oct 20 and Consultation Paper on the above.
Search warrants reform: Summary of Proposals laid before Parliament: Law Com: 7 Oct 20.
Ofsted’s directed surveillance Policy: Ofsted: 9 Oct 20 re directed surveillance under RIPA.
OFSI Annual Review 2019-2020: OFSI 9 Oct 20: Most breaches re Libya but not unexpected as most of frozen assets in UK are Libyan – £11,809m. Reported breaches total £982.34 (up from £262m in previous year).
A better look at the French DPA: Transp. Internat. 23 Oct 20
FACTI Panel Interim Report: (High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda established by UN) on Tax avoidance, corruption and financial crime and remedial measures: FACTI: 24 Sep 20. Summary
Exporting Corruption (13thed): 13 Oct 20 Only 4 countries are described as having active enforcement regimes: US, UK, Switzerland & Israel.
- Foreign Bribery rages across the Globe: 13 Oct 20
- Did an alleged corrupt natural gas contract rob Nigeria of $9.6 Billion? weaponising courts of arbitration to misappropriate public funds: 23 Oct 20.
- Market Abuse in a time of Coronavirus: speech by Julia Hoggett, FCA Director, Market Oversight at City Financial Global event: 12 Oct 20.
- Goldman Sachs fine re 1MDB see below
- FCA investigates 14 firms in Cum-Ex tax scandal across 4 countries: Bloomberg: 23 Oct 20. [FCA decline to comment]. For background see Cum-Ex investigations: UK: ICLG.com : 3 Aug 20.
- Conspiracy to pervert the course of justice charged re hiding an interest in property which might be an asset in part satisfaction of an order that might be made in proceedings brought by FCA: FCA: 28 Oct 20.
- £10m UWO obtained by NCA against Leeds businessman: 7 Oct 20.
- 20 QQAAZZ arrests in Latvia, Bulgaria, UK, Spain and Italy re international money laundering network of millions of euros. Europol 15 Oct 20. 6 arrested in UK: NCA 15 Oct 20.
- Future Challenges in Economic Crime: A View from the SFO: Lisa Osofsky speech (Royal United Services Institute, 8 Oct 20) including wish list of new offences and powers.
- 5th individual charged with fraud at Balli Group and Balli Steel: 22 Oct 20.
- Deferred Prosecution Agreements: SFO Operational Handbook: Revised 23 Oct 20.
Law Society condemns special tax on legal profession (£100m levy to fund fight against financial crime): Law Soc. Gazette: 14 Oct 20 – see Economic Crime Levy: Funding new government action to tackle money laundering: HM Treasury Consultation July 20.
£20.5m 10-year forex Ponzi: Joseph Lewis, pleaded guilty (4 Sep 20: CPS). Sentenced to 5 years 4 months at Southwark: CoLP: 19 Oct 20.
Treasury Committee launches new Economic Crime inquiry a review into progress made in combatting economic crime: 23 Oct 20
Protecting People’s Pensions: Understanding and Preventing Scams: Police Foundation: Sep 20.
Boris Becker denies 28 charges of concealing property (including £1m and his tennis trophies) at Southwark Crown Court in Insolvency Service prosecution: BBC News 23 Oct 20.
National fraud call centre ‘not fit for purpose’ The Times: 19 Oct 20.
Use of AI to cut accounts scandals re development of Engine B to create an open platform for client data analysis: The Times 22 Oct 20.
AML and CTF
EU plans for consistent application of national rules: speech by Valdis Dombrovskis: 30 Sep 20
Global settlement by Goldman Sachs re 1MBD fraud: GS agrees to pay $2.8B to US DoJ with DPA and GS Malaysia division agrees to plead guilty to violating foreign bribery laws: Guardian: 22 Oct 20: DoJ Press Release and links –GS appear to have avoided a compliance monitor- see DPA: 22 Oct 20. Fined £350m by Hong Kong: New Straits Times: 22 Oct 20; and FRA and PRA fine GS International £96.6m for 1MDB risk management failures: FCA 22 Oct 20 and Bank of England News Release: 22 Oct 20. (GS previously paid $3.9B to Malaysia: BBC News 24 July 20.)
FinCen prosecutors demand $60m in civil penalties for allegedly mixing bitcoins for criminals: Coindesk 19 Oct 20. Criminal proceedings in a US federal court also contemplated.
Paris-based financial prosecutor makes ground-breaking switch to private practice: Global Legal Post: 12 Oct 20. Eric Russo, a lead PNF prosecutor (approximate equivalent to the SFO) has joined Quinn Emanuel Urquhart & Sullivan in Paris as a partner. Russo was involved in HSBC, Société Générale and Airbus investigations and DPAs).